Prospective citizens within the City of Yarra will now have to go to ceremonies held by neighbouring councils while the Department of Immigration and Border Protection will hold ceremonies within the City of Yarra as demand requires, including on Australia Day 2018.

Mr Hawke has also written to Local Government and Territories Minister Fiona Nash asking her to consider revoking federal funding to Yarra for citizenship ceremonies.

Should we completely abolish citizenship ceremonies on Australia Day?

"It is regrettable that Yarra Council has proceeded with this course of action. I note that other Councils, including Fremantle and Hobart made the sensible decision to comply with the code rather than risk losing their ability to conduct citizenship ceremonies," he said.

"I am surprised and disappointed that the City of Yarra has chosen to pursue this divisive approach."